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Shares of International Business Machines (NYSE: IBM) slipped more than 7% in pre-market trading after the company posted lower profit in the third quarter and announced its plans to pay $1.5 billion to Globalfoundries to take over its chip unit.

The Armonk, New York-based company reported quarterly net income of $18 million, or $0.02 per share, versus a year-ago profit of $4.04 billion, or $3.68 per share. Its profit, excluding certain items, came in at $3.68 per share.

Its revenue declined to $22.4 billion from $23.3 billion. Analysts were projecting earnings of $4.32 per share on revenue of $23.37 billion.

The loss from discontinued operations in the quarter included a pre-tax charge of $4.7 billion.

The Americas' revenue fell 2% to $10.1 billion, while revenue from Europe/Middle East/Africa slipped 2% to $7.2 billion. Asia-Pacific revenue dropped 9% to $5.0 billion. Revenue from the company's growth markets declined 6%, while revenue in the BRIC countries dropped 7%.

Global Services segment revenue fell 3% to $13.7 billion, while revenue from the Software segment dropped 2% to $5.7 billion. Global Financing segment revenue slipped 3% to $487 million, while revenue from continuing operations from the Systems and Technology segment tumbled 15% to $2.4 billion.

Total gross profit margin from continuing operations narrowed to 48.6% from 49.0%.

“We are disappointed in our performance. We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry. While we did not produce the results we expected to achieve, we again performed well in our strategic growth areas – cloud, data and analytics, security, social and mobile - where we continue to shift our business. We will accelerate this transformation,” said Ginni Rometty, IBM chairman, president and chief executive officer.

IBM shares dipped 7.32% to $168.73 in pre-market trading.

Posted-In: profitEarnings News


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